Mercator Advisory Group’s latest report, Small
Business Banking: A Captive Audience,is the third of three Insight
Summary Reports summarizing the results of the 2018 U.S. Small Business Payments and Banking Survey, a web-based
survey of 2,047 U.S. small businesses (between $500,000 and $10 million annual
sales), which was fielded in the spring of 2018. The previous two reports
presented the survey’s findings on payment acceptance and business-to-business
payments. The new report analyzes small businesses’ use of banking services and
alternative lenders.
Small businesses are a captive audience for financial
institutions as they still visit the branch often. The survey finds that 79% of
U.S. small businesses visit the branch of their primary business bank or credit
union at least once a week, including 24% of firms that visit daily or more
often. Retailers and services are especially likely to visit the branch daily
or more.
Small businesses rely on their business banks
for a variety of services although going to the branch remains primarily
transactional in nature; 72% go to the branch to make teller deposits and 38%
to make ATM deposits, and more deposit cash than checks. Yet, nearly 1 in 4 go
to meet with a relationship manager, often for financial advice, to resolve
problems or to seek assistance for online or mobile banking.
“Small businesses visit bank branches often.
While they are primarily there to make quick deposits, they are a captive
audience for a wealth of services to help small businesses grow and prosper,
particularly lines of credit to support investments and manage their cash flow
and wealth management accounts for their personal financial health,” notes Karen
Augustine, Mercator Advisory Group’s Senior Manager of Primary Data Services,
the author of this report.
This report contains 53 pages
in slide form and 31 exhibits.
Companies mentioned include: Kabbage,
Lending Club, OnDeck Capital, and Prosper.
Highlights of this Insight
Summary Report include:
- Business checking and deposit services and
transactional service used at banks, credit unions, and other providers
- Types of loans held at primary or other banks
or credit unions and at other providers and largest credit line held at a
financial institution
- Experience with online alternative,
peer-to-peer lenders and reasons for use
- Use of merchant cash advance and working
capital loans
- Use of branch, types of activities conducted
at branch for deposits, ATM, advice, and support
- Use and interest in online and mobile banking
capabilities
- Preference for online bill-pay
- Wealth management relationship at primary financial
institution
- Satisfaction with primary
business bank’s dedication to small business